The weak price of oil is increasingly spilling over into other financial markets, battering stocks and currencies of oil-dependent economies and driving central banks to action.

The central banks of Russia and Norway each responded to continuing low oil prices Thursday to try to stem the selloff in their currencies. In the Persian Gulf, stock markets saw sharp declines.

The price of Brent crude, which has tumbled 41% so far this year, dropped to a fresh five-year low of below $63.90 a barrel, while West Texas Intermediate hit $60.09—a level not since mid 2009.

“Prices are forecast to remain pressured for at least two more quarters,” said
Barclays
oil market economist Miswin Mahesh. He predicts that crude could slip below $60 a barrel in the near term—a level which he says is simply not sustainable for markets in the long run.

Russia’s central bank on Thursday hiked its key interest rate to 10.5% from 9.5%, and its deposit rate to 9.5% from 8.5%, in an attempt to halt a slide in the ruble.

The currency was battered earlier this year by geopolitical tensions and resulting sanctions, but its decline has been exacerbated in recent months by the oil shock, especially after the 12-member Organization of the Petroleum Exporting Countries last month rejected calls for drastic action to cut their output. Around 50% of Russia’s annual budget revenue stems from oil and gas exports.

Elsewhere in Europe, the Norwegian krone fell to a five-year low against the euro after the central bank cut its key interest rate to 1.25% from 1.5% to combat slowing domestic growth, specifically citing the tanking price of oil.

The krone lost almost 1.5% against the single currency after the announcement, to trade just over nine kroner per euro.

It has depreciated around 7.4% against the euro since the start of the year. Norges Bank had broadly been expected to keep rates on hold; it last cut rates in March 2012.

Norway is Europe’s biggest crude exporter, and Norges Bank said in a statement Thursday that “activity in the petroleum industry is set to be weaker than projected earlier.”

“The continuing collapse in oil prices now hangs like a bad smell over markets,” said Anthony Peters, a strategist at London-based financial adviser SwissInvest, adding that it “creates all kinds of conundrums in the foreign-exchange market” too.

Tim Ash, head of emerging market research for Standard Bank said that Russia was now “a rabbit caught in the headlights.”

The central bank doesn't want to “waste” reserves by propping up the ruble, “and doesn't really want to raise policy rates for fear of pushing the economy deeper into recession.”

So as long as oil stays low and sanctions remain, the ruble will continue to feel the strain, he said.

Société Générale strategists said that they now suggest investors buy the Turkish lira against the ruble. Turkey is a big energy importer, to the tune of some $55 billion a year, or 6.5% of gross domestic product, according to Standard Bank. Falling oil should deliver benefits for both the country’s current account and for inflation. The lira has risen around 4.7% against the euro so far in 2014.

Further afield, stock markets in the Persian Gulf also plunged Thursday, with traders similarly pointing to oil. Dubai’s market was down more than 7%. The main index in Abu Dhabi dropped 4.7%, Qatar slid 4.3% and Oman was down 4.2%. Saudi Arabia, the largest index in the region, fell 0.2%.

In Europe, the Stoxx Europe 600 closed broadly flat on the day but the subindex of oil and gas companies ended down 0.4%, taking its slide so far this year to nearly 18%.

London’s FTSE 100 index, a large proportion of which is exposed to the oil and gas sector, fell around 0.7% to take losses so for in December to over 4%.

According to several London-based traders, the recent tumble also inspired the central bank of Nigeria to intervene yet again late Wednesday, selling U.S. dollars to prop up the naira.

Nigeria’s central bank has taken action a number of times in recent weeks. Early last week, the naira slumped to 186.9 versus the U.S. dollar to an all-time low. On Thursday it was just below 180, according to Thomson Reuters data.

Oil and natural gas make up almost all of Nigeria’s exports and 80% of government revenue, according to the International Monetary Fund. Last week Nigeria’s finance ministry proposed a lower benchmark for the budgeted oil price, suggesting spending cuts.

A ministry spokesman said that Africa’s biggest crude producer is now budgeting for an oil price of $65 a barrel, compared with the previous estimate of $73.

“The country lacks a large fiscal buffer, which would allow it to maintain spending or run countercyclical policies,” said Hedi Ben-Mlouka, an fund manager at Dubai-based Duet, which looks after around $5.5 billion of equity. As well as Nigeria, Kazakhstan would likely be hit particularly hard too, he said.

On Wednesday, a report by Business Monitor International, a research unit of Fitch Ratings, said that the oil tumble had materially increased the risk of sovereign default in emerging markets, singling out Venezuela and Nigeria as particularly vulnerable.

“A handful of net oil exporters are rushing headlong into the danger zone,” the report states.